Any investor knows that a bustling economy signifies profit and growth for investments. However, what goes up must eventually come down—and that includes the economy. When a recession hits, some investors wonder: is it a good time to invest right now? For real estate and for land, specifically, that answer is yes.
Never Out of Business
When a recession hits, the economy can come to a screeching halt, with many sectors slowed down. Land, however, never loses steam. In times of recession, that means there’s a high demand to sell land, especially for less than market value. While that may not be the best bet for the seller who may be selling land, it’s a great opportunity for the investor to get a great deal. What goes down, comes back up; later down the road, land values will go up again, giving you a larger ROI.
Thanks to supply and demand, there may be more demand for land later on after the recession. Since the amount of land is finite and cannot be increased, there will always be an unfillable craving for land. Just because there’s little interest now, doesn’t mean there won’t be in a year. Land tends to appreciate, increasing its value over time and helping you get your money’s worth.
Since the land is being sold below market value, there are plenty of places to buy land: auctions, websites, classifieds, or even pitching straight to the owner. No matter what medium you use to purchase land, a good deal is more accessible than ever with some research and patience.
One upside of purchasing land is that it is very hands-off. With no development on the lot, there are no worries of maintenance, no mortgage payments, and no tenants. That means there is more money in your pockets in the long run in comparison to a developed lot, which has more expenses. At most, an undeveloped lot requires a good lawn trimming every now and then, which is much easier to handle than bills or tenants.
Creating a Plan
While a recession may be a good time to invest in land, it is smart to have a plan. Setting a budget for how much you would like to invest will help you stretch your dollar in the middle of a recession. It’s probably not a good idea to pour your entire savings into undeveloped lots. Any investment can be a risk, and properly evaluating that risk can help you maximize your profit in the long run.
All in all, investing in land during a recession can be a profitable investment. If planned correctly with a sensible budget and being fully aware of the risks involved. A disciplined, experienced investor knows the importance of investing in a necessity instead of a luxury and how it pays off in the end. With patience and research, a smart investor can find prosperity in times of recession.